Free ports are locations from which goods can be imported and exported without the exporter or importer having to pay tariffs that are levied on the same products when they are brought into the nation through other locations. There is also a reduction in the restrictions that apply for the same products entering or exiting from elsewhere.

Free ports are created to encourage foreign trade. Normal tariffs are to be paid only when products leave a free port to the rest of the nation. An example of the utility of free ports is that they allow manufacturers to import raw materials, process them and export them without paying tariffs that make it uneconomical to do the same and organizations would opt for importing the finished products directly. The creation of free ports is very useful in encouraging local industries.